Credit Strategies For Earnings

[@maxpower4798]

where did you guys find those high premiums ( Which stocks). In real life they are way less only if u look at TSLA prior to earnings you can get that high win:loss ratios

[@revaddict]

This.. Can't agree with you more.. That's the biggest problem with credit spreads.. I have noticed time and time again, the credit received is much lower than 30%.. On top of that, with Tesla you will always have extrinsic value.. You cannot exit your trade without paying.. I have gotten frustrated and been doing more debit spreads due to this..

[@davidradtke160]

Don’t do options plays except when you can find good win/loss ratios.

[@koyomo2910]

Thank you for the video. #tastyuniverse

[@acorn1744]

Iron condor is basically 2 credit spreads. Credit spreads are best suited 30 to 60 DTE or 45 DTE. What is best time to initiate iron condor for earning or events? Around earnings stock tends to move up or down in anticipation before earnings. So one side of iron condor will tested or under. Very difficult to make money with 45 DTE rule.

[@davidradtke160]

On earnings plays you wait till the day of or before earnings and only put it on for the nearest expiration date. Usually the end of the week. It’s really short term play.

[@04111963Q]

What is the "Doe" platform and where do I find it (to estimate earning moves on a stock)?

[@tastyliveshow]

www.tastyworks.com is what we use now!

[@Lonelywarrior77]

So I have to close the position immediately after that IV crush right.. where do I find real-time updates if the earnings is out? On the sec website?

[@RichtheCritical]

Not immediatly after...the Iv will actually take a bit to stabilize. Keep in mind he made this video 4 years ago and while it does apply, we live in a MUCH higher IV environment. Its honestly downright dangerous. Like many earnings these days would potentially blow out his iron condors. Stocks swing 20-30% in one day. Be safe. Earnings are always before or after hours, get press releases from stocks you invest in for the most accurate info!

[@Christian_Ibanez]

What kind of expiration are you typically going for when doing an iron condor for earnings?

[@tastyliveshow]

Always the monthly - I can get much further away from the stock price, and if I get blown out at least I have 30 days+ to wait it out. Iron condor in the weekly can't be rolled out in time for a credit if the spread is completely ITM, so I'd be stuck there. Also much closer to the stock price. Monthly cycles still decay nicely on a small move after earnings.

[@randallewebb]

@@BillHicks420 Correct. These strategies can work REALLY WELL. Remember, the key here is to take advantage of volatility crushing. Using Tastyworks strategies a gain of 20-30% in 1st 3 days you take. In most cases you probably won't hold till expiration to get max profit. 3 years ago, I started doing these and it was so profitable that I started doing Strangles. That was REALLY successful, until Zoom went up 70% overnight on earnings. That was a painful lesson that cost me 11k on my 18k account :( That was an anomaly, but had I did an IC (like I did at the time) I would have at most lost 1k. That is a BIG DIFFERENCE.

[@johnchang1226]

What is a doe trading platform? How and where to get it?

[@acorn1744]

Would you sell a credit spread around earnings? I assume you will taking directional risks? If you do, what is best time to initiate a Credit spread before earnings? Does Delta of 16 still apply before earnings? Usually there is high IV before earnings and post earnings there is VOL crush. What is margin of error is selling credit spread where short leg is at Delta of 16?

[@randallewebb]

I think you are missing something...... All of these strategies ARE credit spreads. You basically are taking a gamble on this premise: - Earnings are times when the most volatile moves of an underlying tend to occur. HOWEVER, that does not mean it USUALLY does. Alot of people that get into this trading style, is BECAUSE they took the opposite bet and lost so often. That is going Long on options right before earnings and seeing volatility DESTROY you. Earnings reports are funny things.... I have seen companies have great earnings and the stock hardly moves. Also, I have seen stocks go up some on my Long-Call but volatility shrank faster.....leaving me for a scratch. In the end it all comes down to probabilities. And that is why you take the trades in the 1st place. So your deltas are fine. In the end though Tastyworks wants you to consider the expected move and decide on that.

[@andis9076]

Is there way to practice this strategy in simulation ?

[@haydenmoore6289]

use paper trading td ameritrade has it

[@samarioantonio]

how long does it take for volatility to start going back up after earnings announcement?

[@tastyliveshow]

It depends on the what happens with the stock price after the announcement. Typically with equities, IV spikes after a big selloff, or if there is some sort of binary event that is announced.

[@levihacker4736]

Is the earnings expected movement available on the Tastyworks platform?

[@tastyliveshow]

Yep! Expected move is listed right next to the actual expiration's IV% - for earnings, we just look at the weekly cycle that contains the announcement. The earnings expected move is a massive chunk of that number. The later in the week it is, the more % chunk it'll be.

[@levihacker4736]

@@tastyliveshow Thank you. What is the Doe trade page Mike is referring to in the Video at the 3 min mark. Thanks

[@ramanwadhwa9309]

Hi, How about selling straddles as a strategy for earnings?. For the overnight risk of big gap up and gap down OTM call and put can be bought???

[@tastyliveshow]

That sounds like an iron fly - selling a straddle and buying wings OTM to define risk. Nothing wrong with it, but I prefer to go multiples of the expected earnings move and sell premium there, so I'm usually doing a 2x earnings move strangle - that's just me though!

[@johnmoy2329]

What about the pin risk on the chicken iron condors? That is an important point not really addressed here.

[@tastyliveshow]

Can you specify with an example scenario?

[@johnmoy2329]

@@tastyliveshow Sorry for the late reply. So let's say that I have an iron condor on a stock and the premium for the short leg is not enough to cover the distance between the closing stock price and the protective long put. This happened to me for BABA on 6/19 and my broker, TDA, closed out the trade at noon Friday while the spread was still in the money. Their reason? They cited volatility even though it was still 4 hours to close. They claimed that it was at risk of expiring ITM and that meant I would have have been at risk of assignment. So they hit the bid and ask to close out the spread turning a marginally profitable trade into an instant loss.

[@jacobramsey1653]

How does this work. You must have the underlying assumption that the implied volatility is not correct. Where in some cases the stock price exceeds the move past the iv built into the option.

[@averagejoey2000]

Look at the market measures, IV is overstated by 20%, 80% of earnings calls

[@S1lv3rdo7]

How does he get the +/- 7 at the top. I don't understand how he can predict how much the stock is going to move?

[@tastyliveshow]

These are just examples, but these numbers would be gathered from the implied volatility of the stock itself. Some platforms offer an expected stock price move on a one standard deviation basis based on the IV% itself - tastyworks.com does which is the platform used on tastytrade!

[@S1lv3rdo7]

@@tastyliveshow Based on the chart, I've been using 1 standard div and killing it this week. Thanks for posting this content. I may have to check out tastyworks.

[@jameseldridge3445]

4th time watching this, hope it sticks this time lol

[@shifinshaji8888]

What is the reason why IV increase with a drop and not with the rise?

[@tastyliveshow]

Assume most of the market is long stock - when the stock drops, fear increases and option buying increases to hedge risk. When the market rallies, people that are long are making money and complacent.

[@antoine6503]

my stupid dog heard the intro, thought it was the doorbell and starting barking at 7 AM to wake everyone up LOL............ nice video though...

[@bmac5826]

lol

[@Gackeen]

Hello, I'm an italian option student. Date to expire in the 3 cases?

[@JohnVanderbeck]

You would be looking to sell in the expiration cycle of the earnings, most often a weekly if available. For example, NFLX has upcoming earnings on July 16th, so I would be selling options in the Jul 20 Monthlies. Typically you would put these strategies on the day before earnings and then close them out right after earnings. In the NFLX example, I would put it on July 16th (earnings are after the bell for NFLX) and take it off July 17th unless things go bad and I feel I can manage it in some manner. Though with defined risk trades, the TastyTrade is typically just to realize the loss and move on. Hope that helps! (Note I am not with TastyTrade at all, just a trader who uses their methods and has learned a lot from them!)

[@until11]

The day of announcement.

[@gavnonadoroge3092]

its nice that you have 3 Credit Strategies For Earnings, how about even one PROFITABLE strategy for earnings?

[@theinflationsituation8870]

BA-DA-BING!

[@chriscoimbra3757]

What you think about buy 100 shares and sell 5 OTM Call with 0.20 Delta ?

[@tastyliveshow]

I don't like it - although technically we can do it, we hold 400 short shares of upside risk if the calls go ITM. This means our bullish trade can quickly become bearish. We would also be margined on the 4 extra calls, so this would be a huge position in terms of capital requirement, since the long 100 shares only covers the risk in one of those short calls!

[@dr.michaelj.stefano8113]

INTERESTING BUT YOU NEED TO BE READY TO BE ASSIGNED SHORT AND BE ON THE HOOK FOR THE DIVIDEND IF ANY

[@nestabus]

Jade Lizard 🦎 it is

[@HedgeYourPosition]

isn't that led zeppelin at the intro???

[@pengekcs]

bring it on home is the name of the track. yup, led zeppelin.

[@dr.michaelj.stefano8113]

WHY NOT JUST OPEN AN OTM 2:1 PUT RATIO CREDIT SPREAD. THE IV STRIKE SKEW FAVORS THIS AT A NET CREDIT AS LONG AS STRIKE SPREAD IS NOT TOO WIDE. OR EVEN STO 2 ATM AND BTO 1 ITM FOR A NET CREDIT. THE CALL CREDIT SPREAD IS EQUIVALENT TO A PUT DEBIT SPREAD, WHICH WNEH ADDED TO YOUR OTM SHORT PUT GIVES THE PUT RATIO CREDIT SPREAD.

[@gsantana4087]

Where’s beef??

[@youknowwhounknown1477]

Since earnings are known binary events and everybody knows that IV will get crushed after earning announcement, wouldn’t market makers and big institutional traders who can manipulate market take advantage of the retail traders who will be placing these trades in the hope that IV crush will make them profit? They can set up a perfect trap for retail traders just like they run the stops for trend followers.

[@tastyliveshow]

Not that I can think of! When you sell an option, you are taking the risk of undefined movements, which we can never know until after the fact. That is why option prices are juicy leading up to an announcement. If premium is really low, we stay away from selling premium prior to the announcement, because the risk doesn't quite align with the premium we collect.

[@dr.michaelj.stefano8113]

KNOWING IV EXPANDS PRIOR TO EARNINGS YOU COULD BE LONG A STRADDLE OR STRANGLE AND EXIT PRIOR TO EARNINGS. ALSO, IT COULD BE AN OPPORTUNITY TO GET LONG A DESIRABLE STOCK AT A DISCOUNT IF ASSIGNE IN THE CASE OF THE LIZARD ABOVE

[@claytonyoung1351]

This guy is incredibly annoying.